A Step Toward Independence

Rufus Samuels and his wife, Angela, have been married for three years and had their first child in July. Like most Americans, the Orange, New Jersey, couple, both 32, was impacted by the recent recession. Rufus was a senior quality assurance analyst for Prudential Financial’s Website before he was laid off in September 2002. He was an unfortunate casualty of job outsourcing. He now works as a consultant, getting work through an IT placement agency.

Rufus’ annual salary was $56,000 before he was laid off. But when he’s working steadily as a consultant, he can pull in up to $75,000. Angela has worked as a credentialing coordinator at CIGNA for the last three years. Her annual salary is $37,000, which brings the couple’s potential gross income to $112,000. Rufus’ assignments have been sporadic lately, so he has focused on building his investment real estate portfolio.

Rufus used his severance from Prudential to make improvements on the couple’s one-family home, a “fixer-upper” they purchased for $74,000 in 1998. More recently Rufus has made $20,000 worth of repairs on a three-family house he’s renting out for additional income.

Rufus knew he had to increase his cash flow if he was ever going to reach his goal of financial independence. “I realized that I need to start making my own breaks,” he says. “I want to have control over what I do.” Since he didn’t have a great deal of cash, he didn’t think he could benefit from a financial adviser. But after attending a financial seminar for women with his wife, he was inspired to reach out to the seminar leader, Sandra Salter of American Express Financial Advisors, to begin crafting a strategy for his family. “I contacted Sandy the next day, and that’s when we got off the ground,” Rufus says.

Salter’s first recommendation to Rufus was to buy more insurance. He had a term-life policy and received health benefits through Angela’s employer, but as a consultant, he had no disability coverage. “Sandy encouraged me to get some disability insurance so if something happened to me, my bills would be paid,” he says. He also purchased a variable-universal life policy. Rufus is looking for tax-deferred savings and a tax-free stream of income in his retirement, and the VUL policy Salter recommended will provide him with that. Including his Prudential group-universal policy, Rufus now has about $800,000 worth of life insurance and $1 million worth of accident insurance. Angela has her own term and variable life policies.

Next, Salter worked on diversifying Rufus’ portfolio. After five years at Prudential, he had $6,000 in a 401(k) plan, and Salter helped him uncover $10,000 in additional pension benefits that he had rolled over into a traditional IRA. Worth approximately $20,000, Rufus’ IRA is invested in a few mutual funds, such as Ariel Appreciation (CAAPX) and Fidelity Advisor Growth & Income (FGIRX), as well as Real Estate Investment Trusts, including CNL Retirement Properties.

Because he doesn’t want to be an employee again, Rufus is also striving to develop his investment